Tax free: After all, how does VAT refund work for tourists?

Tourists residing outside the European Union (EU) are entitled to a VAT refund on purchases made in Portugal, known as the tax-free regime. How does it work?

The Tax and Customs Authority (AT) states in an informational brochure that you are eligible for exemption if:

• You habitually reside outside the European Union;
• Your purchases are not of a commercial nature and the total amount per receipt is not less than 50 euros (excluding tax);
• You leave the European Union with the goods in your personal luggage by the end of the third month following the purchase.

In practice, refunds are applicable for purchases over 50 euros per receipt, excluding resellable products.

Reimbursement in Two Steps: In Store and at the Airport

According to the AT, at the time of purchase, “you must present your passport or another officially recognized document valid for proving your residence outside the European Union.”

“At the time of purchase, the seller requests some information to apply the exemption. At the end of the transaction, the seller provides you with a receipt containing the registration code. If a guarantee was given, the method of reimbursement is defined,” it states.

The AT explains that shopping tax-free in stores and handling everything at the airport on the day of departure avoids bureaucratic delays, allowing more time to enjoy your stay. It suggests arriving a bit earlier to prepare everything in time for boarding.

• At the Airport

The tax-free system in Portugal only applies when departing the EU from Portugal and only to purchases made within the national territory.

If leaving the EU through another member state, follow the procedures outlined by the respective customs authority.

When departing Portugal, at the airport after checking in, head to the customs area and a terminal (kiosk) with the identification document used for the purchase and your boarding pass.

Have the registration proof, goods, and corresponding receipts ready.

Two Scenarios: Green or Red

At the kiosk, two scenarios may occur.

• Green: Exemption confirmed

If a guarantee was provided, you are eligible for a refund from the seller or the financial intermediary company identified on the registration receipt. The refund amount is the guarantee value minus administrative costs incurred by the seller.

• Red: Your exemption conditions need verification

Go to the customs service counter. The customs service checks the documentation and goods presented, issuing a certification or non-certification decision. If the exemption is confirmed and a guarantee was given, you are eligible for a refund from the seller or identified financial intermediary. If not certified, you are not eligible for a refund.